Fw: Investor's Eye: Update - Selan Exploration Technology; Special - Q3FY2012 Banking earnings review, Q3FY2012 Auto earnings review

 

 

Investor's Eye [February 22, 2012]  Summary of Contents STOCK UPDATE Selan Exploration Technology  Cluster: Ugly Duckling Recommendation: Buy Price target: Rs500 Current market price: Rs288 Robust realisation; await ramp-up in production volumes Result highlights  Strong results driven by realisation; volume growth unimpressive though: In Q3FY2012, the net revenues (adjusted for the petroleum profit) of Selan Exploration Technology (Selan) grew by 54% year on year (YoY), as a 76% year-on-year (Y-o-Y) improvement in the realisation over-compensated for the 6% decline in the volume during the quarter. Though sequentially the volume improved by 14% to 41,853 barrels of oil, but the realisation supported 6% growth QoQ taking the sequential sales growth to 20%.  PAT records 65% growth YoY: The operating profit grew by 77% YoY and 5% quarter on quarter (QoQ) to Rs14.7 crore. Following the trend, the profit before tax (PBT) grew by 80% YoY and 5% QoQ to Rs16.7 crore in Q3FY2012. However, there was an extraordinary item to the tune of Rs2.4 crore pertaining to foreign currency variation in Q3FY2012. Therefore, the reported profit after tax (PAT) recorded a growth of 65% YoY and 17% QoQ to Rs10.5 crore. Excluding this extraordinary item, the adjusted PAT seems to jump by 100% YoY and 12% QoQ to Rs12.9 crore.  Volume estimate revised down; consequently profit estimate trimmed: Given the delay in obtaining regulatory approvals for further exploration & development of the company's oil fields, we are fine-tuning our assumptions for the production volume in FY2012 and FY2013. However, the impact of the delay on the net revenue will be limited by the higher than expected blended realisation. We are also introducing our FY2014 estimates for the company in this note. We remain positive about the field development programme and the potential ramp-up in the volume from the same in the coming years. Thus, we maintain our Buy recommendation on Selan with a price target of Rs500. SHAREKHAN SPECIAL Q3FY2012 Banking earnings review  Key points Net earnings ahead of estimates: In Q3FY2012 the earnings of our banking universe showed a growth of 12.6% year on year (YoY) compared with our estimate of a 9.5% year-on-year (Y-o-Y) growth for the period. This was mainly contributed by a better than expected performance on the net interest income (NII) front.  Strong margin drives NII growth: The NII growth of 17.1% YoY was also higher than our estimate driven by a stable margin and a better growth in the advances. The private sector banks delivered a slightly higher growth (up 17.5%YoY) compared with the public sector banks (PSBs; up 16.9% YoY). Slippages decline QoQ, restructuring picks up: Though the slippage for most PSBs declined sequentially, but the same remained at elevated levels (2.4% vs 2.8% in Q2FY2012) contributed by the slippage from the corporate segment (aviation, media, agriculture). The restructured advances also increased on a sequential basis (Bank of Baroda [BoB], Bank of India [BoI], Punjab National Bank [PNB], Union Bank of India [Union Bank] etc) partly contributed by the telecommunications (telecom) sector. Valuation and outlook The Q3FY2012 results show a relatively better growth in the core income led by a stronger net interest margin (NIM). Going ahead, the interest rates are likely to soften which will aid the core income growth of banks and support the growth in their net earnings. Though the higher slippage and increased restructuring (especially chunky accounts like state electricity boards [SEBs], Air India) remain causes for concern for banks but with the likely easing of rates the growth in advances could improve while the pressure on asset quality could ease, thereby benefitting the banks.  Factoring in the likely easing of the interest rates and the asset quality issues the banking stocks have seen a sharp run-up (13% appreciation in the Bankex in the last one month). In this note we have introduced our FY2014 estimates and rolled over our valuation estimates to the FY2014 estimates which has resulted in a revision in the price target for most banks. Given the sharp run-up in the prices of most banking stocks we prefer Axis Bank, Yes Bank, BoB, Allahabad Bank and HDFC as these could see a re-rating from the current levels.   Q3FY2012 Auto earnings review  Revenue growth in double digits while PAT remains flat in Q3FY2012: Sharekhan's automobile (auto) universe grew its revenues by 13.9% in Q3FY2012. The EBIDTA grew at a slower pace of 7.4% year on year (YoY) while the profit after tax (PAT) remained flat on a year-on-year (Y-o-Y) basis. Ex Maruti Suzuki the universe's revenues and EBIDTA grew by 27.1% and 25.2% YoY respectively while its PAT grew at a slower pace of 16.3%. Operating performance under stress, margins decline across the board: Raw material pressure failed to recede during the quarter leading to a lower growth in the EBIDTA vis-a-vis the revenue. About 65% of the auto companies under Sharekhan tracking universe witnessed a sequential drop in their contribution margin, indicating sustained pressure on the material front. The absence of operating leverage put further pressure leading to a decline in the operating profit margin (OPM).  Maruti faced triple whammy: strike, poor demand for petrol cars and yen-hit margins; but the worst is over: Dual blows of a strike at the Manesar plant and a lower demand for petrol cars led to a 27.6% Y-o-Y drop in Maruti Suzuki's volumes in Q3FY2012. Apart from the higher discounts on petrol cars, a sharp appreciation in the yen inflated the import cost and the royalty pay-out. The company reported the lowest OPM in the last few years. The sharp depreciation in the rupee against the dollar and the appreciating yen affected the auto companies by way of marked-to-market (MTM) losses on export hedges, outstanding loans and yen-denominated royalty payables.Maruti Suzuki and Hero MotoCorp are vulnerable to large yen exposures while Mahindra and Mahindra (M&M) felt the impact of the depreciating rupee on its foreign currency denominated outstanding loans. Bajaj Auto also saw a notional MTM loss on its exports as it has hedged its export receivables at lower levels of the rupee for the next one year. Outlook and valuation: We have introduced our FY2014 estimates for Sharekhan's auto universe and have revised our price target upwards for most companies as we have rolled over our valuations to the FY2014 earnings estimates. The upward revision has been major for Maruti Suzuki as we believe that the worst is over for the company. Given the sharp appreciation in the auto stock prices we have kept our recommendations unchanged. Apollo Tyres is poised to outperform our coverage universe. Valuation-based gains are also available for M&M but we have kept a Hold recommendation on the stock due to the overhang of higher duty on diesel vehicles in the forthcoming Union Budget. Our view on the sector remains cautious. Click here to read report: Investor's Eye   Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article. Regards, The Sharekhan Research Team myaccount@sharekhan.com Manage your newsletter subscriptions

Fw: Investor's Eye: Special - Q3FY2012 FMCG earnings review; Update - Retail

 

 

Investor's Eye [February 21, 2012]  Summary of Contents SHAREKHAN SPECIAL Q3FY2012 FMCG earnings review  Key points Volume growth momentum sustained: Q3FY2012 was yet another quarter of strong top line growth for the fast moving consumer goods (FMCG) companies, with the volume growth momentum sustaining during the quarter. Despite a gloomy macro-economic environment almost all the FMCG companies under our coverage (except for Zydus Wellness and Tata Global Beverages Ltd [TGBL]) posted a steady volume growth during the quarter (Hindustan Unilever Ltd [HUL]-about 9% year on year [YoY]; Marico-about 16% YoY; GSK Consumer Healthcare [GSK Consumers]-about 11% YoY; Bajaj Corp-about 20% YoY) sustained during the quarter. The improvement in rural penetration, innovations and renovations in portfolios along with adequate media spends were some of the key drivers of growth for the FMCG companies. The growth in rural India was ahead of that in urban India for most of the FMCG companies under our coverage.  Gross margins improved sequentially: The quarter saw the FMCG companies witnessing a sequential improvement in their gross profit margin (GPM), as the prices of the key inputs declined from their highs in the recent past. HUL continues to curtail its advertisement spends to show a better picture at the operating level while companies like Marico and GSK Consumers continued to support their brands and new launches with brand building and promotional activities. With a strong top line growth, the higher other income aided the FMCG companies under our coverage (ITC, GSK Consumers, Bajaj Corp) to post a robust bottom line growth during the quarter. HUL, Marico and GCPL beat Street's expectation: It was yet another quarter when HUL beat our as well as the Street's expectations by posting a robust operating performance. HUL's top line grew by 16.4% YoY with a volume growth of 9.0% YoY during the quarter. The operating profit margin (OPM) improved substantially due to the trimming of advertisement spends, which aided the operating profit and the adjusted profit after tax (PAT) to grow by 41.9% YoY and 30.3% YoY respectively during the quarter. Marico maintained its above 20% organic revenue growth in Q3FY2012. This was driven by mid-teen volume growth on the back of a strong volume growth in the domestic consumer business. The consolidated top line of Marico grew by 29.4% YoY. However, higher depreciation charges and tax outgo led to a 13% year-on-year (Y-o-Y) bottom line growth (ahead of our expectation). Godrej Consumer Products Ltd (GCPL) results are ahead of our expectation mainly on account of an exponential top line growth an OPM of around 20% (which is better than expected). Outlook and valuation We expect the top line growth of the FMCG companies to sustain in strong double digits, driven by a mix of sales volume and price increases in the coming quarters. The prices of commodities (the key raw materials for FMCG companies) have remained volatile in the past few months. If these correct from the current levels, we can see a substantial improvement in the margins in the coming quarters. Also, going ahead any significant correction in the commodity prices might cause the FMCG companies to shift their focus back on improving the sales volume growth.  We retain our view of remaining selective in the FMCG space with preference for the companies having a strong balance sheet, better earnings visibility and decent valuations from the current levels. Hence we maintain our penchant for ITC and GSK Consumers among the large-caps, and for GCPL and Bajaj Corp in the mid-cap space. We also like Marico largely on account of its sustained strong performance in the domestic market and a three-pronged strategy of driving growth by entering into categories through new product launches, acquisitions in the domestic as well as international markets, and enhancing the reach of the existing portfolio. SECTOR UPDATE Retail      India on the cusp of a consumer revolution-collaboration the way forward We attended the Confederation of Indian Industry (CII)'s "National Retail Summit 2012" recently. The summit was represented by leading veterans from the fast moving consumer goods (FMCG) and retail industries as well as consultants and investment stalwarts. The following are the key takeaways from the summit: All the speakers from the FMCG as well as retail segment unanimously agreed that India is on the cusp of a consumption revolution that is yet to make inroads (approximately Rs3.6-trillion consumption opportunity by 2020). Many categories in food as well as fashion either do not exist in India today or have very low penetration, thus paving the way for increasing categories and robust category growth (a case in point mentioned was of chocolate where India's one-year consumption equals Brazil's one-day consumption). As players discussed the opportunity that exists, they also spoke of the challenges to be faced, like inadequate supply chains, logistic issues, and the ever discerning and ever changing consumer and the more complex shopper. The discussion ended with the participants agreeing for a collaborative effort between FMCG and retail stakeholders that would aid India to unleash the consumption wave. Speakers across verticals spoke on various topics, we present below some of the thoughts that flowed during the summit.  We remain bullish on India's consumption space: The FMCG and retail players are both in a sweet spot to cash in on this great opportunity through a collaborative effort, creating newer categories and newer products for consumption. Food, education, leisure and healthcare are the segments to see a revolution (growing 3-4x from the current levels). Thus, we maintain our bullish view on the consumption space. Click here to read report: Investor's Eye   Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article. Regards, The Sharekhan Research Team myaccount@sharekhan.com Manage your newsletter subscriptions

Fw: Investor's Eye: Thematic Report (Switch from HDFC Bank to HDFC); Update - Shiv-Vani Oil & Gas Exploration Services, Provogue India

 

 

Investor's Eye [February 17, 2012]  Summary of Contents THEMATIC REPORT Switch from HDFC Bank to HDFC Key points Tactical switch from HDFC Bank to HDFC: In the past one year, HDFC Bank has appreciated by close to 30% as compared to the 14% appreciation in HDFC in the same period. This has usually been the case in a rising interest rate scenario due to HDFC's dependence on bulk/wholesale deposits and corporate loans. On the other hand, HDFC Bank benefits from its strong retail deposit (current account/savings account) and asset base. However, it is the other way round when the interest rate cycle reverses. HDFC tends to outperform relative to HDFC Bank in a declining interest rate scenario. The empirical evidence from the past interest rate cycle supports our argument. Thus, we expect the discount in the valuation of HDFC Bank (vs HDFC) to revert to a mean of 20% plus (from around 6-7% now) over the next one year.  HDFC-relatively better placed to gain from the reversal in the interest rate cycle: As the interest rates ease out, HDFC's cost of funds is expected to decline relatively faster due to its dependence on wholesale funds that constitute 75% of its funding. Even on the assets side (advances), the bulk of its mortgage loans are on a floating rate. Plus, the advances under the dual rate home loan scheme (Rs22,000 crore of teaser loans with a lower interest rate for the initial two years) are scheduled to get re-priced over the next one year). Going ahead, as the operating environment improves the performance of the subsidiaries (insurance, asset management etc) should also improve, boosting the overall valuations and leading to a re-rating of the stock. In this note, we have revised our sum-of-the-parts (SOTP) based price target for HDFC to Rs785 per share (valuing the subsidiaries and investments at Rs235 per share) and upgraded our recommendation on the stock to Buyfrom Hold earlier. HDFC Bank-the best operational metrics among private sector banks but offers limited upside: While HDFC Bank is among the best private sector banks but tactically it can underperform HDFC in the next 6-12 months as seen in the past. This is due to the relatively slower rate of repricing of its assets and liabilities. The bank is essentially current account and savings account (CASA) funded for which the cost is fixed (4% for savings deposits) and is facing increased competition from the other private sector banks that are offering higher rates on saving deposits. The bank has also raised its deposit rates recently by 50-100 basis points to catch up with its peers; this will also affect its margins. In addition, 70% of its non-CASA deposits are from the retail segment where the cost is stickier. Further, the valuations have run up over the three-year mean and further upside seems limited from these levels. STOCK UPDATE Shiv-Vani Oil & Gas Exploration Services  Cluster: Ugly Duckling Recommendation: Buy Price target: Rs283 Current market price: Rs214 Price target revised down to Rs283 Key points A disappointing performance: The net sales of Shiv-Vani Oil & Gas Exploration Services (Shiv-Vani) largely remained unchanged at Rs379.2 crore (increased by 0.9% year on year [YoY]) during Q3FY2012. The sales figure also includes Rs28 crore from trading activity. However, on a sequential basis, the company reported a 13.2% growth in its net sales during the quarter. At the operating profit level the company registered a decline of 15.1% YoY to Rs153.8 crore on account of contraction of 765 basis points in the operating profit margin (OPM) to 40.6% due to higher raw material and lubricant prices, and expenses of Rs27 crore booked on trading activity. Sequentially, the OPM contracted by 269 basis points.  Earnings deteriorated despite tax benefit: The interest cost during the quarter increased by 10.5% YoY to Rs70.1 crore. Hence, the profit before tax (PBT) of the company declined by 44.4% YoY to Rs45.9 crore as compared to a decline of 15.1% at the operating level. However, due to the tax benefit (a tax write-back of Rs10.3 crore in Q3FY2012), the adjusted profit after tax (PAT) declined by 30.8% YoY but increased by 22.1% on a quarter-on-quarter (Q-o-Q) basis. Further, on account of currency fluctuation, the company had a huge foreign exchange (forex) loss to the tune of Rs39.2 crore. Hence, the reported PAT declined to just Rs16.9 crore as compared to the reported net profit of Rs70 crore in the corresponding quarter of the previous year.  Order book remains at Rs2,600 crore (1.7x its FY2011 revenue): Currently, the company's order book is around Rs2,600 crore, which is close to 1.7x its FY2011 revenues. Out of the current order book, Rs100 crore of orders are for seismic study, around Rs400 crore worth of orders are from CBM and Rs600 crore worth of orders are from Oman. Based on this, the management expects to record revenue of around Rs1,600 crore in FY2013. In terms of order inflow, the company has not bagged any big-ticket order during M9FY2012 due to a lack of orders announced by the upstream companies like ONGC and Oil India. The company bagged a few small orders worth Rs500 crore in October and November 2011. The live bid of the company is around Rs3,000 crore and the management is optimistic about winning around Rs1,000-1,200 crore worth of orders in the next two to three quarters.  Downgrading earnings estimates for FY2012 and FY2013: We are downgrading our earnings estimates for FY2012 and FY2013 mainly to factor in the lower than expected revenue growth and higher than expected OPM. Consequently, the revised earnings per share (EPS) estimates for FY2012 and FY2013 now stand at Rs44.3 and Rs47.2 respectively.  Limited downside risk but lacks upside triggers; Buy retained: As a result of the cut in the estimates, the revised earnings growth estimate is likely to get reduce. Consequently, we reduce our price target to Rs283 from Rs300. The current market price discounts the FY2012 earnings by 4.8x and the FY2013 earnings by 4.5x. The stock is available at enterprise value (EV)/EBIDTA of 4.9x on FY2013 estimates. We maintain our Buy recommendation on the stock with a revised price target of Rs283.    Provogue India  Cluster: Ugly Duckling Recommendation: Buy Price target: Rs62 Current market price: Rs33 Deep value-maintain Buy; price target revised to Rs62 Q3FY2012 weak results; below expectation: Provogue India posted a weak performance for Q3FY2012 and the same was below our expectation. Though the revenue grew by 20.5% year on year (YoY), a sharp erosion in the operating profitability (led by an increased cost of goods sold) resulted in a 41.7% contraction in the operating profit and a 48.3% year-on-year (Y-o-Y) contraction in the net adjusted earnings for the quarter. Valuation and view Taking cognisance of the poor Q3FY2012 performance and the general slowing economy we have reduced our FY2012 earnings estimate by 18% and FY2013 estimate by 12%. Our revised EPS estimates for FY2012 and FY2013 stand at Rs2.8 and Rs3.6 respectively. Despite weak results and reduction in our estimates, we remain positive on Provogue India as we believe that the company provides an exciting opportunity to play the buoyancy in the domestic consumption space, with the brand Provgue and the retail-centric real estate business Prozone. We value Provogue India on a sum-of-the-parts (SOTP) basis. We value the core business on a PE basis at 10x FY2013 (Rs36 per share). Based on the net asset value (NAV) the share of the real estate business (Prozone) works out to Rs26 per share (we are discounting the NAV by 30% of the actual Rs37). Thus, we maintain our Buy recommendation on the stock with a revised price target of Rs62.   Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article. Regards, The Sharekhan Research Team myaccount@sharekhan.com Manage your newsletter subscriptions

 

Fw: Investor's Eye: Update - Marico, Bajaj Holdings & Investment, Ratnamani Metals and Tubes

 

 

Investor's Eye [February 16, 2012]  Summary of Contents STOCK UPDATE Marico  Cluster: Apple Green Recommendation: Hold Price target: Rs186 Current market price: Rs162 Price target revised to Rs186 Key points Event: Marico will acquire Set Wet, Livon, Zatak and certain other personal care brands from Reckitt Benckiser (RB) for an undisclosed sum (media reports put the deal value in the range of Rs450-500 crore). These brands are the top three in the domestic hair gel, leave-on hair serum and male deodorant categories respectively, and are growing at around 25% per annum. The brands collectively are expected to achieve around Rs150 crore of revenues in FY2012 (around 4% of Marico's estimated consolidated revenues for FY2012). The gross profit margin (GPM) of these brands is much higher than Marico's GPM. Though this acquisition is positive from longer-term perspective, we don't expect the same to add to the bottom line of Marico in the near term. Details about the transaction: The transaction includes the transfer of all key assets including intellectual property rights, supply agreements and third party manufacturing agreements (Paras Pharmaceuticals' personal care business). The acquisition is likely to be completed in the middle of Q1FY2013. After the completion of the transaction, RB will provide distribution support to Marico for three months.  Rational behind the acquisition The acquisition provides Marico entry into low penetrated and strong growing categories such as deodorants and styling gels.  The brands will plug the gap in Marico's personal care portfolio.  Marico could leverage on the brand positioning to launch some of the products from its international portfolio (especially in the male grooming category) into the domestic market. The brands will also help Marico to participate in tailwind categories over time. Marico will also earn around 20% of the distribution reach of Paras Pharmaceuticals' personal care business. Funding of acquisition: Though the company has not disclosed the deal value, the media reports indicate that the deal value is in the range of Rs450-500 crore (3.0-3.3x sales of three brands). The funding of the acquisition would be done through a mix of (domestic) debt, equity and internal accruals.  Outlook and view: This acquisition of brands will help Marico to enter into strong growing categories (such as deodorant and male grooming products). Also, this acquisition will help Marico to reduce its dependence on commodity-linked products such as coconut oil and edible oil. Though there are synergetic benefits, which Marico can obtain in the long run, we don't expect these brands to add significantly to the consolidated bottom line in the near term. Having said that, more clarity would emerge once the company discloses the key financials of the deal.  We are introducing our FY2014 earnings estimate and revising the price target to Rs186 (22x its FY2014E earnings per share [EPS] of Rs8.4) in this note. At the current market price the stock trades at 22.8x its FY2013E EPS of Rs7.1 and 19.2x its FY2014E EPS of Rs8.4. We maintain our Hold recommendation on the stock.     Bajaj Holdings & Investment  Cluster: Apple Green Recommendation: Buy Price target: Rs1,051 Current market price: Rs804 Price target revised to Rs1,051 Q3FY2012 result highlights The consolidated income of Bajaj Holdings and Investment Ltd (BHIL) declined by 76.4% year on year (YoY) to Rs62.4 crore against Rs265 crore reported in the corresponding period of the previous year. During each of the last four quarters the company had reported a lacklustre top line of under Rs100 crore. The subdued equity market had presented limited profit booking opportunities for the company in the last few quarters.  The company's income from associates grew 27.5% YoY. This moderated the profit after tax (PAT) decline to 28.8% YoY, lower than the top line growth. During Q3FY2012, the total market value of the company's investments declined by 2.3% sequentially while there was no major change in the cost of the investments.  The market value of the equity investments in the subsidiary company and the joint venture declined by 16% quarter on quarter (QoQ). One of the reasons for the same is the 6% fall in the share price of Maharasthra Scooters in which the company has a 24% stake.   Valuation Bajaj Auto is the key investment of BHIL and has been valued at 12.5x FY2013 earnings per share (EPS). The company reported good quarterly numbers, but there are concerns of sharp moderation in the domestic demand for its products. Our price target for Bajaj Finserv has been derived using the sum-of-the-parts (SOTP) valuation method.  Given the strategic nature of BHIL's investments, we have given a holding company discount of 50% to BHIL's equity investments. The liquid investments have been valued at cost. Our price target of Rs1,051.4 implies a 31% upside for the stock. We maintain our Buy recommendation on the stock.   Ratnamani Metals and Tubes  Cluster: Ugly Duckling Recommendation: Buy Price target: Rs132 Current market price: Rs110 Strong revenue performance Result highlights Revenues surge: Ratnamani Metals & Tubes (Ratnamani) reported another strong quarter in terms of revenue growth-in Q3FY2012 its revenues grew by 74.2% on a year-on-year (Y-o-Y) basis to Rs280.7 crore. The sales growth was backed by a 140% growth year on year (YoY) in the carbon steel tube and pipe (CS pipe) segment and a 57% Y-o-Y jump in the stainless steel tube and pipe (SS pipe) segment. The company is experiencing strong traction in the export business with exports contributing about 50% of the revenues.  OPM affected by forex loss: The gross profit margin (GPM) dipped by 180 basis points YoY to 36.7% despite an increase in the realisation mainly due to a higher raw material cost. The realisation for CS pipes increased by 29% YoY whereas that for SS pipes improved by 18.6%. The operating profit margin (OPM) was down by 560 basis points YoY to 14.9% despite a surge in the revenues. The fall was due to a foreign exchange (forex) loss of Rs12 crore on marked-to-market (MTM) forex denominated loans.  Net profit grows by 19.2%: On the back of a 70% fall in the other income and a 54.8% increase in the tax outgo (with the effective tax rate up by 520 basis points to 29.6%), the net profit growth was at 19.2% to Rs19.8 crore. Marginally tweaked estimates: In view of the volume and revenue performance of the quarter, we have tweaked our estimates for FY2012 and FY2013. Our revenue growth estimates have increased by 3.9% and 4.6% for FY2012 and FY2013 respectively while our earnings estimates have increased by 5.4% and 4.5% for FY2012 and FY2013 respectively.  Valuation: Through the first nine months of FY2012, the company has reported a strong revenue performance. However, its margins have trended down consistently. The management commentary remains encouraging in terms of the potential opportunities in the oil & gas sector. Going forward, we expect the company's revenues and profits to grow at a compounded annual growth rate (CAGR) of 30% and 15.6% respectively over FY2011-13. At the current market price, the stock is attractively trading at a price/earnings (PE) multiple of 4.7x its FY2013E earnings. On an enterprise value (EV)/EBITDA basis, it is trading at 3.5x FY2013E EBITDA. We maintain our Buy rating on the stock with a price target of Rs132.   Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article. Regards, The Sharekhan Research Team myaccount@sharekhan.com Manage your newsletter subscriptions